Customer Lifetime Value
Use Customer Service Surveys to
Asses Their True Value
Customer Service Software is a Fabulous Tool For This Particular Job.
In my business, we think about the customer lifetime value, rather than maximizing on short term sales. We also consider which
customer loyalty concepts
we're going to introduce for our high value customers. Developing a powerful & lasting customer relationship with your entire client base is paramount to this mindset. Depending on your line of work, determining a lifetime customer value through customer service surveys, customer service software or by other means may or may not be the way to go.
What Does it Actually Mean?
If you are unfamiliar with the term “customer lifetime value”, it simply means that you determine how much it will cost to get customers, in terms of advertising, marketing, giveaways or other promotions. Then, you determine how much the consumer will spend over the course of his or her lifetime. Subtract the cost to acquire from the income you expect to receive and you get the customer lifetime value. Some of the businesses that should use this method to figure out how much to spend on marketing include insurance agencies and fitness clubs.
Sometimes It's Not So simple.
Professionals like doctors and lawyers might use this method, but it is difficult to determine how much a patient or client will actually spend.Certainly some general
marketing information
will help out here. It can also be hard to figure out whether they are gone for good or simply healthy and without the need of legal help.
It Works Well if You Have Repeat Sales.
If you can expect to have repeat sales, then you can consider using the lifetime customer value formula. For example, supplement companies often offer discounts for “loyalty reorder programs”. They make less on each bottle, but they expect to make more over the long-term. Some of the things that we consider in our business include the costs of goods, customer support and the billing costs. All of those costs can change, either up or down, as time goes by. Being accurate is one of the challenges that we face. So, we must allow a certain amount for errors or percentage of uncertainty.
Help is Available.
There are professional groups that can help you be more accurate, but you know your business better than anyone else. So, don’t be afraid to get involved in the computations. Practically any company can benefit from calculating the customer lifetime value, unless they sell items that are rarely, if ever, replaced. It’s just part of thinking about the future.
Modern Net-Wit:
"A smart girl knows how to play tennis, piano & dumb" ..........................................................Lynn Redgrave
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